A TV pundit claims that a proportional income tax does not satisfy horizontal equity, because it places different burdens on individuals with the same lifetime income:
A. Construct a simple 2-period, 2-person example, showing how a proportional in- come tax places different burdens on individuals with the same lifetime income.
B. Why does the violation of horizontal equity arise?
C. Do consumption taxes face the criticism of the TV pundit? Explain
D. In what other dimension might consumption taxes be considered “unfair”?